THE DAILY CHART: Striking a new yuan balance

As the US continues its campaign to convince China to raise the value of the yuan, there has been no sign of significant change in the skewed trade balance between the world's two biggest economies in recent months. Increasing US exports to China is a key feature of the Obama administration's vision for a manufacturing-reliant post-crisis economy, but given that the latest data reveals that Chinese industrial production actually decreased as exports to the US increased, it seems unlikely that this trade balance will shift its weight any time soon.  Not even the brief yuan rally against the US dollar in June, which came after Chinese intervention, could a dint in China's superior export position

But as Karen Maley observes, the yuan hit a record high against the US dollar on Monday and this may indicate that China is allowing it's currency to strengthen in order to avoid a potential confrontation with the US. "Some analysts point out that the yuan's recent rise comes after data showing that Chinese economic activity is picking us,” she writes. "As a result, Chinese policy-makers might be less worried that a stronger yuan will dent export sales.” However, the yuan's growth spurt could be short-lived, Maley says, "because Chinese consumption is so low, the country has little choice but to continue exporting in order to maintain solid economic growth rates.”